0000084748-95-000014.txt : 19950815 0000084748-95-000014.hdr.sgml : 19950815 ACCESSION NUMBER: 0000084748-95-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950702 FILED AS OF DATE: 19950814 SROS: AMEX SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROGERS CORP CENTRAL INDEX KEY: 0000084748 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS, MATERIALS, SYNTH RESINS & NONVULCAN ELASTOMERS [2821] IRS NUMBER: 060513860 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04347 FILM NUMBER: 95562432 BUSINESS ADDRESS: STREET 1: ONE TECHNOLOGY DR STREET 2: P.O. BOX 188 CITY: ROGERS STATE: CT ZIP: 06263-0188 BUSINESS PHONE: 2037749605 10-Q 1 Total pages included - 13 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 2, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-4347 ROGERS CORPORATION (Exact name of Registrant as specified in its charter) Massachusetts 06-0513860 (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.) P.O. Box 188, One Technology Drive, Rogers, Connecticut 06263-0188 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (203) 774-9605 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No The number of shares outstanding of the Registrant's classes of common stock as of July 28, 1995: Capital Stock, $1 Par Value--7,114,480 shares -1- [PAGE] ROGERS CORPORATION AND SUBSIDIARIES FORM 10-Q July 2, 1995 INDEX Page No. PART I--FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited): Consolidated Statements of Income-- Three Months and Six Months Ended July 2, 1995 and July 3, 1994 3 Consolidated Balance Sheets-- July 2, 1995 and January 1, 1995 4-5 Consolidated Statements of Cash Flows-- Six Months Ended July 2, 1995 and July 3, 1994 6 Supplementary Notes 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 PART II--OTHER INFORMATION Item 4. Submission of Matters to Vote of Security Holders 11 Item 6. Exhibits and Reports on Form 8-K 11-12 SIGNATURES 13 -2- [PAGE] PART I - FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS ROGERS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Dollars in Thousands Except for Per Share Amounts) Three Months Ended: Six Months Ended: July 2, July 3, July 2, July 3, 1995 1994 1995 1994 Net Sales $ 37,422 $ 34,995 $ 73,839 $ 69,000 Cost of Sales 25,255 24,998 50,163 48,877 Selling and Administrative Expenses 5,671 5,139 11,336 10,253 Research and Development Expenses 2,354 2,294 4,758 4,563 Total Costs and Expenses 33,280 32,431 66,257 63,693 Operating Income 4,142 2,564 7,582 5,307 Other Income less Other Charges 347 274 1,101 265 Interest Expense, Net 46 349 81 720 Income Before Income Taxes 4,443 2,489 8,602 4,852 Income Taxes Expense: Federal and Foreign 630 63 1,212 121 State 125 37 250 73 Net Income $ 3,688 $ 2,389 $ 7,140 $ 4,658 Net Income Per Share: Primary $ 0.94 $ 0.70 $ 1.84 $ 1.37 Fully Diluted $ 0.94 $ 0.68 $ 1.83 $ 1.34 Average Shares Outstanding: Primary 3,899,919 3,436,342 3,890,516 3,405,722 Fully Diluted 3,906,247 3,673,501 3,900,624 3,656,992 The accompanying notes are an integral part of the consolidated financial statements. -3- [PAGE] ROGERS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS (Dollars in Thousands) July 2, 1995 January 1, 1995 Current Assets: Cash and Cash Equivalents $ 17,350 $ 13,851 Accounts Receivable 20,751 16,495 Inventories: Raw Materials 4,937 4,311 In-Process and Finished 5,707 5,302 Less LIFO Reserve (1,056) (1,056) Total Inventories 9,588 8,557 Net Assets Held for Sale (Note B) 6,687 6,687 Other Current Assets 449 1,596 Total Current Assets 54,825 47,186 Property, Plant and Equipment, Net of Accumulated Depreciation of $56,356 and $52,464 34,734 34,061 Investments in Unconsolidated Joint Ventures 4,410 4,072 Intangible Pension Asset 2,365 2,365 Other Assets 1,674 1,759 Total Assets $ 98,008 $ 89,443 The accompanying notes are an integral part of the consolidated financial statements. -4- [PAGE] ROGERS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - CONTINUED LIABILITIES AND SHAREHOLDERS' EQUITY (Dollars in Thousands) July 2, 1995 January 1, 1995 Current Liabilities: Accounts Payable $ 8,005 $ 7,778 Current Maturities of Long-Term Debt 600 1,225 Accrued Employee Benefits and Compensation 7,379 6,646 Other Accrued Liabilities 7,005 5,849 Taxes Other than Federal and Foreign Income 970 984 Total Current Liabilities 23,959 22,482 Long-Term Debt, less Current Maturities 4,800 6,675 Noncurrent Deferred Income Taxes 1,655 1,520 Noncurrent Pension Liability 4,497 4,497 Noncurrent Retiree Health Care and Life Insurance Benefits 6,560 6,560 Other Long-Term Liabilities 2,780 2,584 Shareholders' Equity: Capital Stock, $1 Par Value: Authorized Shares 25,000,000; Issued and Outstanding Shares 3,556,140 and 3,522,635 3,556 3,523 Additional Paid-In Capital 29,317 28,632 Equity Translation Adjustment 2,693 1,918 Retained Earnings 18,191 11,052 Total Shareholders' Equity 53,757 45,125 Total Liabilities and Shareholders' Equity $ 98,008 $ 89,443 The accompanying notes are an integral part of the consolidated financial statements. -5- [PAGE] ROGERS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) Six Months Ended: July 2, July 3, 1995 1994 CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES: Net Income $ 7,140 $ 4,658 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 3,265 3,432 Equity in Undistributed (Income) Loss of Unconsolidated Joint Ventures - Net (395) 407 (Gain)Loss on Disposition of Property, Plant and Equipment 186 (1) Other - Net 1,366 232 Changes in Operating Assets and Liabilities Excluding Effects of Disposition of Assets: Accounts Receivable (3,741) (4,667) Inventories (912) (792) Prepaid Expenses 18 343 Accounts Payable and Accrued Expenses 1,708 (152) Net Cash Provided by Operating Activities 8,635 3,460 CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES: Capital Expenditures (3,598) (1,979) Proceeds from Sale of Business -- 360 Proceeds from Sale of Property, Plant and Equipment -- 1,235 Net Cash (Used in) Investing Activities (3,598) (384) CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES: Repayments of Debt Principal (2,500) (3,637) Proceeds from Sale of Capital Stock 718 1,348 Net Cash (Used in) Financing Activities (1,782) (2,289) Effect of Exchange Rate Changes on Cash 243 (10) Net Increase in Cash and Cash Equivalents 3,499 777 Cash and Cash Equivalents at Beginning of Year 13,851 4,533 Cash and Cash Equivalents at End of Quarter $ 17,350 $ 5,310 The accompanying notes are an integral part of the consolidated financial statements. -6- [PAGE] ROGERS CORPORATION AND SUBSIDIARIES SUPPLEMENTARY NOTES A. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10- Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the audited consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the fiscal year ended January 1, 1995. B. Net Assets Held for Sale consists of the land and building in Chandler, Arizona, currently being leased to the buyer of the Flexible Interconnections Division and the land and building in Mesa, Arizona, related to the divested business of the Power Distribution Division. C. The Company had a $15.0 million secured revolving credit arrangement with Fleet Bank, N.A. at the end of the first quarter 1995. A new unsecured arrangement with Fleet Bank, N.A. for a maximum of $10.0 million of borrowings was entered into on April 13, 1995. At July 2, 1995, there were no borrowings under this arrangement. D. Interest paid to lenders during the first six months of 1995 and 1994 was approximately $700,000 and $800,000, respectively. E. Income taxes paid were $483,000 and $188,000 in the first six months of 1995 and 1994, respectively. F. To help widen the distribution and enhance the marketability of the Corporation's Capital Stock, the Board of Directors, at its June 22nd meeting, authorized a 2 for 1 stock split for shareholders of record on July 7th, payable on July 28th. The number of shares reported on the cover page reflect the stock split, while those on the financial statements and Exhibit 11 do not. -7- [PAGE] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net sales in the second quarter of 1995 were $37.4 million, a 7% increase when compared with $35.0 million for the same period in 1994. Adjusted for divestitures and for currency rate changes, net sales for the second quarter increased 13% over the same period last year. For the first six months, sales totaled $73.8 million and, after adjustments, increased 14% over the comparable 1994 period. These sales gains were mainly the result of unit volume increases. Six-month sales records were established in each of the Corporation's major product groups. Volume was especially strong in the wireless communications market both for microwave materials and for European manufactured power distribution components, as well as in the computer market for components made from the Corporation's flexible circuit materials. Sales of continuing Polymer Products increased 9% for the second quarter and 10% for the first half of 1995, compared with the same periods in 1994. In the high performance elastomer products group, R/bak flexographic printing plate cushioning and ENDUR rollers and belts for laser printers and copiers had strong sales. Rogers INOAC Corporation, the Corporation's 50% owned joint venture with the INOAC Corporation in Japan, achieved some sales growth, despite the continuing economic difficulties in that country. Sales of Electronic Products for the second quarter and for the first six months increased 18% and 20%, respectively, compared with the same periods last year, after adjusting for divestitures and currency rate changes. The Corporation's position as an important supplier of materials for wireless communications is becoming stronger. Sales of RO3000(TM) commercial microwave laminate, introduced in 1994, are growing nicely, and widespread interest is developing for RO4000(TM) microwave laminate introduced earlier this year. The Corporation's customers are starting to convert to our lower priced materials for some applications. There is good demand for the Corporation's established RT/duroid microwave laminates; however, customer conversions to lower priced RO3000 and RO4000 are expected to have greater impact in the second half of the year. Durel Corporation, the Corporation's 50% owned electroluminescent lamp joint venture with 3M, moved into its new 77,000 square foot manufacturing plant in the second quarter. Sales were lower than in the first three months of the year, mainly because of inventory reductions at two major customers. In the second half of the year, Durel's sales are expected to increase in each of its three major application areas: watches, automotive, and wireless communications. Profits, both before and after taxes, and earnings per share for the second quarter and first half were the highest for any quarter and for any six-month period in the Corporation's history. Compared with the same periods last year, before-tax profits for 1995 were up over 75% in both the second quarter and first half. Net income, incorporating a 17% income tax rate in 1995, gained over 50% and earnings per share rose 34% in each of the periods. The significantly higher profits were attributable to increased sales, operating cost improvements, increased royalty and joint venture income, and reduced interest expense. Manufacturing profit as a percentage of sales in the first six months increased from 29% in 1994 to 32% in 1995. This increase was attributable to stronger manufacturing margins in several operations, notably Soladyne Division, Rogers small microwave printed circuit operation which has continued the transition to increased commercial applications. Selling and administrative expenses for the first six months of 1995 as a percentage of sales were approximately the same as the previous year. -8- [PAGE] Research and development expenses for the first half of 1995 were at the approximate level of 1994 expenses. Three new circuit materials aimed at the wireless communications market were introduced during the first quarter of 1995 with technical support activity continuing into the second quarter. The development of lower cost processes continues to be important and is a key consideration in the market positioning of these new circuit materials. Net interest expense for the first half of 1995 decreased substantially from the comparable 1994 period because of lower borrowings and the significant increase in cash and cash equivalents which led directly to increased investment income. During the second quarter, debt of $2.5 million bearing an interest rate of 10.5% was prepaid. The prepayment expense of $180,000 is reflect in Other Income less Other Charges. Total debt outstanding at July 2, 1995, was $5.4 million compared with $13.7 million at July 3, 1994. Net cash provided by operating activities in the first six months of 1995 totaled $8.6 million, compared with $3.5 million in the same 1994 period. The year-to-year increase is attributable mainly to increased net income and other working capital changes. As of April 13, 1995, the Corporation can borrow up to a maximum of $10.0 million under a new unsecured revolving credit arrangement with Fleet Bank, N.A. Amounts borrowed under this arrangement are to be paid in full by March 31, 1998. The Corporation had no borrowings under revolving credit arrangements at July 2, 1995. Capital expenditures in the first half of 1995 and 1994 were $3.6 million and $2.0 million, respectively. Management expects that the level of spending for 1995 will approximate $7.0 million, primarily for capacity expansions and new process equipment. It is anticipated that these expenditures will be financed with internally generated funds. Other income less other charges aggregated $1.1 million for the first half of 1995 compared with $0.3 million for the same period in 1994. This increase is attributable primarily to higher income from the Corporation's 50% owned joint ventures and from royalties. In 1995, for the first time, the Corporation was able to recognize its share of the profits of Durel Corporation. In addition, royalty payments related to the sale in 1994 of the U.S. power distribution business were reflected in first half 1995 results. Quarterly royalty payments related to this sale are expected to be included in the Corporation's statements at decreasing rates over the next four years. The Corporation is subject to federal, state and local laws and regulations concerning the environment and is currently engaged in proceedings involving a number of sites under these laws, usually as a participant in a group of potentially responsible parties (PRPs). The Corporation has been named as a PRP in six cases involving waste disposal sites, all of which are superfund sites. Several of these proceedings are at a preliminary stage and it is impossible to estimate the cost of remediation, the timing and extent of remedial action which may be required by governmental authorities, and the amount of liability, if any, of the Corporation alone or in relation to that of any other potentially responsible parties. The Corporation also has been seeking to identify insurance coverage with respect to these matters. Where it has been possible to make a reasonable estimate of the Corporation's liability, a provision has been established. Insurance proceeds have only been taken into account when they have been confirmed by or received from the insurance company. Actual cost to be incurred in future periods may vary from these estimates. Based on facts presently known to it, the Corporation does not believe that the outcome of these proceedings will have a material adverse effect on its financial condition. -9- [PAGE] In addition to the above proceedings, the Corporation has been actively working with the Connecticut Department of Environmental Protection (CT DEP) related to certain PCB contamination in the soil beneath a small section of cement flooring at its East Woodstock, Connecticut facility. The Corporation is developing a remediation plan with CT DEP. On the basis of estimates prepared by the Corporation's environmental engineers and consultants, the Corporation recorded a provision of approximately $0.9 million in 1994 for costs related to this matter. Management believes, based on facts currently available, that the implementation of the aforementioned remediation will not have a material additional adverse impact on earnings. At July 2, 1995, other accrued liabilities were greater than July 3, 1994, primarily because of environmental reserves. The Corporation has not had any material recurring costs and capital expenditures relating to environmental matters, except as specifically described in the preceding statements. -10- [PAGE] PART II - OTHER INFORMATION Item 4. Submission of Matters to Vote of Security Holders The Registrant held its Annual Meeting of shareholders on April 18, 1995. The following members were elected to the Company's Board of Directors to hold office in the ensuing year: Nominee In Favor Withheld Leonid V. Azaroff 3,288,298 8,727 Leonard M. Baker 3,288,812 8,213 Wallace Barnes 3,288,199 8,826 Harry H. Birkenruth 3,288,467 8,558 Mildred S. Dresselhaus 3,285,003 12,022 Donald J. Harper 3,288,199 8,826 Gregory B. Howey 3,288,812 8,213 Leonard R. Jaskol 3,288,707 8,318 William E. Mitchell 3,288,812 8,213 Item 6. Reports on Form 8-K (b) There were no reports on Form 8-K filed for the six months ended July 2, 1995. -11- [PAGE] EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS Three Months Six Months Ended: Ended: July 2, July 3, July 2, July 3, 1995 1994 1995 1994 1.Net income $3,688,000 $2,389,000 $7,140,000 $4,658,000 2.Interest on convertible subordinated debentures, net of taxes -- 113,000 -- 277,000 3.Net income as adjusted $3,688,000 $2,502,000 $7,140,000 $4,885,000 4.Weighted average number of shares outstanding during period 3,549,364 3,269,230 3,538,794 3,252,721 5.Net effect of dilutive stock options - based on the treasury stock method using average market price 296,757 167,112 296,143 153,001 6.Additional net shares due to windfall tax benefit-based on average market price 53,798 -- 55,579 -- 7.Total weighted average number of shares and capital equivalent shares assumed outstanding 3,899,919 3,436,342 3,890,516 3,405,722 8.Additional net shares, issuable when market value at period end exceeds average market value during period 8,271 32,613 13,114 46,724 9.Adjustment of additional net shares due to windfall tax benefit - based on higher of market or closing price (1,943) -- (3,006) -- 10. Assuming conversion of convertible subordinated debentures -- 204,546 -- 204,546 11. Shares assumed outstanding for computation of fully diluted earnings per share 3,906,247 3,673,501 3,900,624 3,656,992 Net income per capital share (1/4) $1.04 $0.73 $2.02 $1.43 Net income per capital share and capital share equivalant (1/7) $0.94 $0.70 $1.84 $1.37 Net income per capital share assuming full dilution (3/11) $0.94 $0.68 $1.83 $1.34 This calculation is submitted in accordance with Regulation S-K Item 601(b)(11). -12- [PAGE] SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ROGERS CORPORATION (Registrant) William A. Krein By s/WILLIAM A. KREIN William A. Krein Authorized Officer Vice President, Finance Dated: August 14, 1995 -13- [PAGE] EX-27 2
5 1000 6-MOS DEC-31-1995 JUL-02-1995 1,589 15,761 20,751 0 9,588 54,825 91,090 56,356 98,008 23,959 0 3,556 0 0 50,201 98,008 73,839 73,839 50,163 66,257 (1,101) 0 81 8,602 1,462 7,140 0 0 0 7,140 1.84 1.83